NITIN JAMDAR AND M.S. KARNIK, JJ.

Brijesh Pathak for the Petitioner. J.B. Mishra for the Respondent.

ORDER

1. By this Petition the Petitioner has challenged the action of the Respondents in provisionally attaching the bank account of the Petitioner.

2. On 6 December 2019 the Deputy Commissioner, Central Goods and Service Tax (CGST) informed the Branch Manager where the Petitioner holds a bank account that in view of the proceedings filed against one Yusuf Fauzdar Shaikh, proprietor of M/s. Fashion Creations, proceedings have been launched against the said taxable person and the Respondents were of the belief that amounts were being transferred to various persons, including the Petitioner. Hence, a direction was issued to the bank not to allow any debit.

3. Though the order does not refer to any provision of law, the learned Counsel for the Petitioner points out that the power for provisionally attaching the bank account is under section 83 of the Central Goods and Services Tax (CGST) Act, 2017. The learned Counsel for the Petitioner submitted that there are no proceedings under sections 62, 63, 64, 67, 73 and 74 against the Petitioner as mentioned under section 83 of CGST Act, which is necessary if attachment under section 83 is to be levied. The learned Counsel for the Petitioner relies upon the decision of this Court dated 17 January 2020 in Writ Petition No. 3145 of 2019 Kaish Impex (P.) Ltd. v. Union of India wherein this Court has observed thus :—

“13. Primary defence of the Respondents is that even if section 62, 63, 64, 67, 73 and 74 mentioned in section 83 of the Act are not referable to the case of the Petitioner, since a summons is issued to the Petitioner in pursuant to the inquiry initiated against M/s.Maps Global under section 67 of the Act, by the issuance of summons the proceedings get extended to the Petitioner also.

14. The analysis of section 83 of the Act will show that such interpretation is not permissible and not contemplated by the legislature. Section 83 read with Rule 159(1), and the form GST DRC-22, lay down a scheme as to how provisional attachment in certain cases is to be levied. Section 83 though uses the phrase ‘pendency of any proceedings’, the proceedings are referable to section 62, 63, 64, 67, 73 and 74 of the Act and none other. The bank account of the taxable person can be attached against whom the proceedings under the sections mentioned above are initiated. Section 83 does not provide for an automatic extension to any other taxable person from an inquiry specifically launched against a taxable person under these provisions. Section 83 read with section 159(2), and the form GST DRC-22 show that a proceeding has to be initiated against a specific taxable person, an opinion has to be formed that to protect the interest of Revenue an order of provisional attachment is necessary. The format of the order, i.e. the form GST DRC-22 also specifies the particulars of a registered taxable person and which proceedings have been launched against the aforesaid taxable person indicating a nexus between the proceedings to be initiated against a taxable person and provisional attachment of bank account of such taxable person.

15. Power to provisionally attach bank accounts is a drastic power. Considering the consequences that ensue from provisional attachment of bank accounts, the Courts have repeatedly emphasized that this power is not to be routinely exercised. Under section 83, the legislature has no doubt conferred power on the authorities to provisionally attach bank accounts to safeguard government revenue, but the same is within well-defined ambit. Only upon contingencies provided therein that the power under section 83 can be exercised. This power is to be used in only limited circumstances and it is not an omnibus power.

16. It is therefore not possible to accept the submission of the Respondents that even though specified proceedings have been launched against one taxable person, bank account of another taxable person can be provisionally attached merely based on the summons issued under section 70 to him.”

The facts of the present case are identical to that of the case of Kaish Impex Pvt. Ltd.

4. The Petitioner is entitled to succeed. Accordingly the Writ Petition is allowed. The order passed by the Respondent dated 6 December 2019 attaching the bank account of the Petitioner, details of which have been given in the Petition is quashed and set aside.

M. S. SANKLECHA AND RIYAZ I. CHAGLA, JJ.

Vikram Nankani, Sr. Counsel and Prithviraj Chaudhary for the Petitioner. Amol Joshi and Pradeep S. Jetly for the Respondent.

ORDER

 

1. Heard. Rule.

2. On 10th August 2017, Petitioner No. 2 transferred a part of its business i.e. Headend In The Sky (HITS) to Petitioner No. 1. However, as on 1st July 2017 there was Input Credit available to the Petitioner No. 2 from the earlier CENVAT Regime. Thus, the Petitioner No. 2 sought to carry forward its available Input Credit to the GST regime by filing TRANS 1. In its revised TRANS 1 the Petitioner No. 2 in terms of Section 140(8) of the Central Goods and Services Tax Act, 2017 (for short “the Act”) sought to distribute the Input Credit available to it amongst its branch offices/locations which have separate registration under the Act. However, due to technical difficulties, though the revised TRANS 1 was accepted, the distribution of the credit available to it among its various branches/locations is not reflected on the website. Thus, the GST credit ledger available at the various branches/locations do not reflect the credit which would be available to it on account of the distribution done by the Mumbai location of Petitioner No. 2.

3. In cases of transfer of business as in this case from Petitioner No. 2 to Petitioner No. 1 in terms of Section 18(3) of the Act, the transferee of a business would be entitled to take input tax credit which remains unutilised in the transferor’s books. This unutilised credit would be reflected in ITC 02 to be filed by the Petitioner No. 2. However, this flow of Input Credit to Petitioner No. 1 from Petitioner No. 2 is not taking place as the Revised TRANS 1 to the extent it shows distribution is not being reflected. This admittedly in view of the technical difficulties as recorded in the Minutes of the second Meeting of Grievance Redressal Committee held on 21st August 2018, where the system is not accepting a downward revision of Input Credit available. As a consequence of the distribution as sought by the Petitioner No. 2 to the various locations/branches in its revised TRANS 1 not being reflected on the website, the Input Credit cannot be reflected in the GST ledgerat the branches/locations. Therefore, the branches/locations are not able to utilise the Input Credit by filing the GSTR 3B. Further it is pointed out that in terms of Section 16(4) of the Act, the last date for taking the input tax credit for the financial year period ending March 2018 would be the 20th October 2018. In case the sameisnotreflectedintheFormGSTR 3Breturnthe Petitioners’ location/branches would lose the benefit of the input tax credit. This position in law is not disputed by the Revenue.

4. Further our attention is drawn to the Ministry of Finance press release dated 18th October 2018 wherein it has the last date to avail all input tax credit in respect of invoices issued for the period July 2017 to March 2018 is clarified.

Although the above press note does not in terms deal with and/or make reference to the Input Credit available from the CENVAT regime being transited into the present GST regime.

The Revenue does not dispute the Petitioners’ contention that in such cases also because of the mandate of Section 16(4) of the Act, if the credit is not availed of prior to 20th October 2018, it would lapse.

5. This Petition was adjourned from 4th October 2018 to 12th October 2018 at the instance of the Respondents. On 12th October 2018 this Petition was again adjourned to 17th October 2018 (at the instance of the Petitioner). On 17th October2017,itwasadjournedattherequestofthe Respondents in particular to respond to the case made out by the Petitioners. Today, whenthe Petition reached, the Respondents place reliance upon the earlier Additional Affidavit dated 21st September 2018. It does not deal with the above contention urged by the Petitioners. In fact, on facts and/or in law at this stage, the Respondents do not dispute that the Petitioners are entitled to distribute the credit in terms of Section 140(8) of the Act nor dispute that it is entitled to and/or covered by the Assessees’ who can file form GSTR 3B, nor that the provisions of Section 16(4) of the Act apply, nor dispute that the last date for filing the GSTR 3B is 20th October 2018 and not doing so would result in the lapse of the credit.

6. In fact the Petitioners location at Delhi had filed a Writ Petition in the Delhi High Court bearing Writ Petition No. (C) 8691 of 2018 (Indusind Media Communications Ltd. v. Union of India), wherein the Petitioners at Delhi branch/location had made a grievance of not being entitled to take the transition credit i.e. the Input Credit available prior to 30th June 2017 for payment of tax post 1st July 2017. The Hon’ble Delhi High Court in its order dated 16th October 2018 in the above Petition while admitting the Petition noted the fact that the Grievance Redressal Forum of the GST Council in the Meeting held on 21st August 2018 had recorded in its minutes that the Delhi branch/location could not file its GSTR 3B and take credit in view of technical problems in uploading TRANS 1 and that the grievance needs to be addressed. Thus, pending the redressal of the Petitioners’ grievance, the Delhi High Court by its order dated 16th October 2018 has allowed the Delhi branch/location to file GSTR 3B Form manually and take the credit distributed to it in terms of the third proviso to Section 140(8) of the Act subject to the final outcome of the Petition.

7. In view of the above, the undisputed position before us is that the Petitioners are entitled to distribute the Input Credit available with it as on 1st July 2017 amongst its branches/locations. This distribution has not been possible on account of technical problems of the Respondents. Further the availment of input tax credit available on 1st July 2017 has to be done on or before 20th October 2018 in view of Section 16(4) of the Act. Thus, it is likely that the Petitioners may be deprived of the facility of the input tax credit available with it on 1st July 2017, if the same is not taken before 20th October 2018. It is to be noted that the Respondents have extended the time to file TRANS 1 and TRANS 2, but no such extension has been granted to extend the time to file GSTR 3B. Thus, in the above facts, pending the final disposal of the Petition (when these issues will be considered in greater depth), as the system is not accepting it, the Petitioners would manually file with the Respondents a copy of its revised TRANS 1, ITC 01 and also GSTR 3B at Mumbai (in physical form).

8. On the basis of the revised TRANS 1, ITC 02 and the GSTR 3B at Mumbai (to be certified by the Commissioner at Mumbai), the Petitioners will be entitled to take the credit reduced at Mumbai (Maharashtra) to its locations in Delhi, Gujarat and Karnataka subject to the satisfaction of the Commissioner having jurisdiction over those locations. We are not giving any directions to the Commissioners of Delhi, Gujarat and Karnataka as in terms of Section 25(4) of the Act each registered location/branch is a distinct person. Therefore, on the above basis of being distinct persons under the Act, they have in cases of Delhi locations and Karnataka locations (as informed by Shri. Nankani, the learned Senior Counsel), the Petitioner has filed separate Petitions. Moreover, the Commissioners at separate locations/branches (except Mumbai) are not parties before us. Therefore, appropriate orders from the jurisdictional Commissioners on the basis of the certificates issued by the Mumbai Commissionerate be obtained by the Petitioners locations/branches subject to the satisfaction of the concerned Commissioners in accordance with law.

9. Liberty to apply. The Petition expedited.

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M.S. SANKLECHA AND RIYAZ I. CHAGLA, JJ.

Dr. Abhinav Chandrachud for the Petitioner. Pradeep S. Jetly, J.B. Mishra and Ms. Jyoti Chavan, AGP for the Respondent.

ORDER

1. This Petition under Article 226 of the Constitution of India seeks a direction to the Respondent No. 3 to allow the Petitioners to resubmit his Form TRAN-1 either electronically or physically, containing the correct figure of Cenvat credit available to the Petitioners under the Central Goods and Services Tax Act, 2017 (for short “the Act“).

2. The Petitioners had while submitting its Form TRAN-1 inter alia to enable the unutilised Cenvat credit from the earlier regime be carried forward into the GST regime had on account of typographical error indicated that the Cenvat credit available is Rs. 11,10,555/- instead of Rs. 1,11,05,550/-. This the Petitioners have been seeking to correct by approaching the Respondents. However, inspite of the Petitioners best efforts, the Respondents have refused to allow the Petitioners to carry out the necessary amendment to the TRAN-1 already submitted or even accept a fresh TRAN-1.

3. We note that the human errors such as one which is arising in the present Petition are likely to have taken place in other cases also. At times these mistakes in keying in the correct figures would work in favour of the State and at other times in favour of Assessee. According to learned Counsel for both sides, there is no provision in the Act, which allows correction/rectification of such errors.

4. During the course of hearing, our attention is drawn to Section 172 of the Act which inter alia provides for removal of difficulties which may arise during the implementation of the Act.

5. In the above view, it appears to us that it would be appropriate that the Central Government issues a general and/or special order under Section 172 of the Act addressing the above issue on general or special basis, taking into account the ground realities.

6. In the above view, at the request of Shri. Jetly, the learned Counsel appearing for the Respondents No. 1 and 3, the Petition is adjourned to 10th October 2018.

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